The Economic Progress of Immigrants

This paper presents a theoretical and empirical study of the economic progress experienced by immigrants in the U.S. labor market. The theoretical framework illustrates that the relationship between the entry wage of immigrants and the subsequent rate of wage growth depends on the technology of the human capital production function, particularly the extent of substitution or complementarity between pre-existing' human capital and post-migration investments. The empirical analysis uses the 1970-1990 decennial Census data. The evidence indicates that the correlation between the log entry wage and the rate of wage growth is positive but this correlation is weakened and perhaps turns negative when we compare immigrants who start out in the United States with similar human capital endowments. The empirical analysis also indicates that the same source country characteristics that lead to high wages at the time of entry also lead to faster wage growth.